Making the national electricity market fit for purpose

This post was originally published on Sustainability Matters

The Australian Government has commenced a review into how Australia’s largest electricity grid and market will operate in the coming decades, aiming to keep costs low for households and business while better managing the rapid increase and integration of rooftop solar and utility-scale reliable renewables.

An independent panel, led by Associate Professor Tim Nelson with Paula Conboy, Ava Hancock and Philip Hirschhorn, will undertake widespread consultation and make its final recommendations to Energy and Climate Ministers in late 2025.

The panel will look at National Energy Market (NEM) wholesale market settings to ensure the market promotes investment in firmed renewable energy generation and storage capacity into the 2030s and beyond.

The NEM interconnected network has around 40,000 km of transmission lines and cables, and supplies electricity to more than 23 million people.

It covers all states and territories apart from Western Australia and the Northern Territory, and was originally designed to support a baseload power grid predominantly fuelled by coal generators.

A review has become increasingly important to ensure the right settings are in place to meet increasing demand for electricity, and to support a smooth transition to reliable renewables as aging coal-fired power stations are retired from the system.

The Commonwealth, with the support of NEM state and territory governments, previously responded to the need for accelerated investment in firmed renewables by introducing the Capacity Investment Scheme (CIS), which will deliver almost half as much capacity again in clean, cheap, reliable renewables and storage as is in the current NEM, by 2030.

State and territory governments and energy market bodies were consulted on the review’s terms of reference, which are available at the NEM Wholesale Market Settings Review page on DCCEEW’s website. 

Minister for Climate Change and Energy Chris Bowen said: “The review will provide a comprehensive assessment of what the market will need next, once the current CIS tenders end in 2027, to ensure that investment pipeline remains strong.”

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